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2010 Investors’ Agenda of Priority Points The Attractiveness of the Netherlands as a Location for Foreign Investment Wednesday May 19, 2010. AmCham Investment Attractiveness Survey.
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2010 Investors’ Agenda of Priority PointsThe Attractiveness of the Netherlands as a Location for Foreign InvestmentWednesday May 19, 2010
AmCham Investment Attractiveness Survey • In Q1 2010 top executives of AmCham member companies were asked for their opinion, perception and expectations of the attractiveness of the Dutch investment climate.
Profile of Respondents – Company Turnover (% of respondents)
Profile of Respondents – Number of Employees (% respondents)
Most attractive location criteria for investing in the Netherlands
Economic recession has had only a slight negative effect on investors’ perception of the Netherlands as a location where company might establish or develop activities. Q: Has your perception of the Netherlands as a location where your company might establish or develop activities improved or not over 2009? :
Top 6 most satisfying factors of the Dutch investment climate Total ‘Attractive’ 94% 90% 89% 86% 85% 84%
Top 6 most dissatisfying factors of the Dutch investment climate Total ‘unattractive’ 71% 64% 61% 51% 40% 36%
Foreign investors are catalysts for productivity and growth in the Dutch economy Foreign investors: ▪ Are more successful ▪ Create more employment ▪ Hire more skilled workers ▪ Outsource more locally than their Dutch counterparts. Source: Min. of Economic Affairs - Buitenlandse Investeerders zijn Groeiversnellers voor de Nederlandse Economie (July 2007)
The same study notes that more of these catalysts can be attracted by: • Continually improving the investment climate The challenge for government is similar to that of companies in a competitive environment: a systematic, sustained effort is needed to continually upgrade all the parameters that make a nation competitive.
Policy Implications 1. Support labor flexibility & employability Why? • Employment protection legislation (for permanent contracts) strict by international comparison • Restricts employers to adjust employment levels to economic conditions • Inhibits innovative start-ups • Discourages employees to invest in own employability
Policy Implications 2. Do not increase income and corporate taxation Why? • Higher taxes for labor and business will brake present brittle economic recovery • Higher income taxes will reduce labor availability in a time where greater participation is needed • Taxes on corporate profit and capital are the most disruptive of taxes (OECD: increased consumption taxes are preferred) • Stability and predictability on tax front is essential to make NL more attractive as a country to invest in
Policy Implications 3. Invest in innovation and knowledge intensification Why? • The nation’s talent pool will be the source of economic growth in an increasingly knowledge intensive economy AmCham supports the Innovation Platform’s agenda for increased investment in the nation’s talent: • Increase teaching quality • More customized and made-to-measure applications in education of individuals • Life-long learning • Stimulation of R&D in NL’s core sectors of competence
Conclusion The attractiveness of NL for foreign investment has improved significantly in recent years: • Effective tax rates on companies have decreased • Extensive fiscal incentive measures have been introduced for companies active in R&D • Many political parties acknowledge the need for continued investment in education and see the need for increased labor flexibility
Conclusion • Fiscal stability and predictability is an essential characteristic for a country wishing to attract foreign investors. • Present economic circumstances are trying. But, it is clear that economic recovery and sustained growth will ultimately have to come from the country’s business community – including foreign investors. • The Netherlands’ openness to foreign investors and diverse cultures has served it well in the past and should be nurtured to remain a catalyst for increased business dynamism and innovation in the future.
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